However unclear when asked what
specific regulations and requirements are needed: “I
can’t tell you as nobody can in the industry exactly what
you’ll need for a particular circumstance.”

Says
Anadarko oil spill plan for drilling last summer would not
have met Labour's new standards, saying “obviously a month
is – we would never want to see that sort of situation to
happen. “

Royalties and taxes to be kept at around 42
cents in the dollar but “with further discoveries we would
certainly lift the royalty rate which would then be able to
go back into the regions”

Would look at perhaps 5%
retained by the region

Will consider setting up a
sovereign wealth fund for oil profits modelled on Norway's
Global Fund and to ensure inter-generational equity

Says
New Zealand can exploit oil resources and back clean-tech
sector as Shearer acknowledges "fossil fuels are
out"

Lisa Owen: … This morning the [Labour]
party’s energy spokesman David Shearer joins me this
morning to reveal its policy this election. You are here
this morning to say you support it practice now aren’t
you?

David Shearer: Well we support oil drilling
and we have done in the past, there’s no major change
there. What we want to see is a regime very much like in
Norway, a Norwegian model where there is good processes of
approval, there’s tight regulations, we have a regime for
making sure that that money is used well and at the same
time we try and make sure our transition to renewables goes
on in pace because at the end of the day fossil fuels are
out. They can not continue to be our future. But we can use
them to transition to renewables.

Ok there’s a
lot in there let’s unpack some of it. National has said
this is a potentially a 12-billion dollar industry but we
had the summer of exploration, nobody found anything and as
you say oil production is on its way out, it’s falling. Is
this potential oil boom a mirage?

Well people say
that there’s the potential out there. We had 14 or so
wells drilled recently with nothing found. So it’s
anybody’s guess and for a government and I would say
certainly a Labour government putting all our cards on the
table and saying our economic development is going to depend
or rely on the discovery of oil is nonsense. It’s like
walking into a casino and hoping that the ball lands on
number 36. But it is one strand of our development
processes. We should be focusing on adding value to our
agricultural goods or some of the IT stuff that we’re
going. That will be generating more of the income into the
future. But there’s a potential there and while there’s
a potential we should be looking at it.

So why do
it at all? I mean the Green’s cite, I think its 45-million
a year in subsidies of fossil fuel industries. Why chase it
at all? Why not just branch out into clean tech or other
areas?

Well certainly that… it’s not an
and/or thing, it’s an and. You do both effectively. So
what I’m saying is that is we are able to have industry
coming down here and drilling for oil and finding oil,
obviously that will benefit us. The government is not
putting in an enormous amount of money; the people who are
taking the risk here are the actual companies that are
coming down. And the amount of money that we are spending,
to help them invest in New Zealand it’s actually pretty
small. And even some of those subsidies I think, what
you’ll find is a lot of those subsidies are around the IP
and some of the information that is dug up by various oil
companies that we transfer to new oil companies if they come
in. So in many ways it’s building up our stock of
knowledge around the oil industry.

Well your
leader has actually criticised elements of how National’s
handling this industry. A lack of liability cover he says
and he’s not sure whether best environmental practices are
being followed. So how would things be different under a
Labour government?

Well the first thing we would
want to do is to make sure that the approval process has a
lot more public participation. And that would mean getting
out front the block offer that they normally put up would
actually have a, we would argue should have wider public
participation there, that the government should actually
bring that to be discussed. So when the block offer is
actually put out there companies that are coming in to
tender for it know that the participation is actually taking
place already. That’s the first thing; getting out front
so that people have a greater degree of
participation.

So getting communities to agree to
it before they find something?

Exactly. And then
but also give surety to the companies that are coming in
that in fact what they’ll be getting is something that
they know they’ll be able to move along with. Secondly
regulation, certainly insurance, right now we’re looking
at insurance of 26-million dollars that should be bumped up
to closer to 400-million dollars. We should ensure that
liability

It’s in the review and National is
reviewing that and the suggested level is
300-million.

It should be at least 300-million
dollars. We should have our own people on the rigs. Right
now it’s just simply a paper audit. We do not have New
Zealanders overseeing the exploratory rigs that are out
there doing the drilling. We should have our own people
there on the ground and certainly on the rigs. We should be
able to have certainly the insurance but also the ability
to, if there is an accident, be able respond much quicker
than we have done in the past.

So what are you
saying there? That equipment to respond to an oil spill
should be onsite in New Zealand?

To a much
greater degree that we have at the moment, I mean we’ve
got what three skiffs and I don’t know, a couple of
booms.

So what specifically would you want
here?

Well we’ve spoken to the industry and
they believe that what they can do is have greater – more
capping equipment on site and they can have other equipment,
because they’re not actually sure what will be necessary
in a given situation that can be flown in much more quickly.
And I think that’s where we want to be going with
that.

Well let’s look at a specific example
there, Anadarko was drilling this summer and we know that
its oil clean-up plan said that it could take a month for a
capping stack to plug a leak to get here, 115 days for a rig
to arrive. Would you let them drill under those
circumstances?

Well what I believe we can do is
to have – we have to speak to the industry, this not
something you can necessarily lay down and say because
we’re not quite sure what accident might happen. And
hopefully and accident doesn’t happen.

But
that’s the whole point isn’t it? You aren’t quite sure
what kind of accident might happen, so would you allow them
to drill under those circumstances?

But what
I’m saying is what we can do is to have much more
equipment on site and much more equipment within flying
distance of New Zealand to bring that down to New Zealand
deal with any emergency.

So is a month and 115
days, is that an ok timeline for you?

Well of
course it’s not. Obvious a month is – we would never
want to see that sort of situation to happen.

So
you wouldn’t let them drill under those
circumstances?

Well what I’m saying is we want
to make sure first of all, first of all that we have the
best regulations in place that we have also on standby an
ability to respond to most emergencies and within flying
time an ability to come and respond.

But Mr
Shearer, I’m asking you what specific regulations and
requirements you would need and you seem a bit woolly on
it?

Well I’m telling – I can’t tell you as
nobody can in the industry exactly what you’ll need for a
particular circumstance. What I’m saying though is that if
we have the best environment to drill in, in the world and
we’re looking at the Norwegian model that I was talking to
you about before, what we want to have it’s a bit like the
airline industry. It’s very, very safe but when it goes
wrong it goes badly wrong. And what we want to have is an
Air New Zealand rather than an Air Togo. I mean that’s
effectively what we want to try and do so that these
situations don’t occur.

You raise the Norwegian
example there so let’s look at royalties and taxes at the
moment they’re about 42 cents in the dollar, Norway has 76
and the Green’s here would like it to be around 70
percent. So is it time for those to move up?

With
further discoveries yes I agree with putting royalties up.
But right now where New Zealand is based if you put it up to
70 cents tomorrow, 70 percent tomorrow you would effectively
kill the industry. We are a country that is at the bottom of
the South Pacific, it costs a hundred-million dollars to
drill a hole here in New Zealand and if you were to put it
up before you knew what was actually under the groundyou
would effectively kill the industry.

So no rise at
the moment. What about regional royalties? New Zealand first
thinks about 25-percent for example should go back into the
region that the mining is taking place in. Would you do the
same for oil?

I think there’s a really strong
argument for regions being able to know that they can
directly benefit in a further discovery. With further
discoveries we would certainly lift the royalty rate which
would then be able to go back into the regions.

So
how much to go back into the regions?

Well it
depends on what actually – what we find in a particular
place. I mean you can’t necessarily say as a
percentage.

As a percentage
though?

Well I mean overseas they’re looking at
5-percent of a royalty, I don’t know if that’s
appropriate to a particular well that might be found.
Certainly in Taranaki there’s about a billion dollars of
economic activity going on inside Taranaki as a result of
the oil industry at the moment despite the fact we don’t
have a royalty regime. So many of these areas are actually
benefiting a lot from that. And if you had a find for
example off the coast of Canterbury you can imagine the gas,
it’s mainly gas in New Zealand it’s less likely to be
oil, the gas that would be coming onshore would provide
enormous economic development and potential in the South
Island.

So let’s say someone does strike oil or
gas, what would you do in terms of the royalties? Would you
set up, like Norway has, you know they have got two pension
funds and saving for future generations, investing for
future generations, what would you do?

Well in
Norway’s case what actually happened was with the amount
of oil that was coming in and the amount of revenue that was
coming in, what they realised was that their economy was
going to explode effectively, the inflation was going to go
up as a result of having too much money washed through it.
We’re not, unfortunately, in that circumstance. I’d love
it if we were. But what they did do was they put it into
a…as you say a pension scheme, a sovereign wealth fund and
from there they were able to draw from it and Norway’s
future is secure probably for another 100,200
years.

So do you anticipate a fund like
that?

Look I can see that there is certainly
merit in that and there will be other announcements in and
around that. There’s definitely an argument to be
formulated around ensuring that there is generational
equity, so that what we pull out of the ground now goes on
to benefit not just the people today but the people in the
future.

Alright well the Greens, they’re likely
to be your collation partners, how do you – Russel Norman
has said that he would like to negotiate a deep sea drilling
policy after the election depending on the numbers. So
wedded are you to this?

Well I don’t think
we’re as far apart as some people think we are. I mean
obviously the Greens don’t want to close down our oil
industry because they’re talking about putting the royalty
figures up to 70-percent. That obviously is based on the
fact.

They don’t want deep sea drilling though
and you’re supporting it and you’ve got a policy for
it.

Well we’ve got a policy because we believe
that there’s a future for New Zealand and a future for us
being able to transition into renewables. And if this allows
us to transition into renewables I would have thought that
that was something the Greens would want to
support.

Could Russel Norman talk you round, talk
you out of this deep sea drilling policy?

I think
while we’ve got the potential for such wealth to flow into
New Zealand and the ability as I say to transition to other
forms of energy, why would you want to do it? In New Zealand
at the moment, most -

He might be able to talk you
out of it? You’re not negotiable on this?

Look
I’m obviously saying we sit down and negotiate, that’s
what happens after elections, which coalitions. But I would
argue that this is our policy, this is what we think it
best. Most New Zealanders support oil drilling. Most New
Zealanders also want to make sure that the environment is
well and truly protected. What we’re saying is we can do
both. We can do both of those things together. And you only
need to look at Norway or Taranaki to see that’s the
case.

Well you’re saying why wouldn’t you do
it while the Greens answer to that is they’re worried
about climate change and it shows you’re not serious about
the environment, protecting the environment.

Well
actually that’s not true. That’s absolutely not true. We
are serious about the environment but we’re also serious
about creating jobs and making sure that New Zealand can get
ahead. And if you can do both of those things why wouldn’t
you want to do it.

In the time left just quickly I
want to ask you that - turning to another issue; the
government’s announced this ministerial inquiry into the
handling of the case around the Malaysian diplomat. Does it
go far enough?

No because basically what happens
is it focuses on the department and doesn’t focus on the
minister. So this is a ministerial inquiry that looks at
everything except the actions of the minister. I mean at the
end of the day what your seeing here is a way of shutting
down the argument in order of Murray McCully to walk scot
free through to the election.

The other thing is
that David Cunliffe, the preferred prime minister ratings,
they’re below yours. David Cunliffe’s are below yours.
Why do you think he’s failing to connect?

Ah
look, there’s a long wait before it between now and the
election. You watch-

So why isn’t he connecting
now?

He hasn’t been in that position for as
long as I have been or was. But between now and the election
there’s quite a lot of water to go under the bridge. And I
know several elections that have turned around as a
result.

So you can’t answer why he’s not
connecting?

Ah I’m just saying that he
definitely is connecting but will likely improve over time
as we go towards the election for sure.

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